Starbucks argues tip-pooling case in New York

Starbucks Corp. is arguing in a New York court this week that its shift supervisors should be allowed to share in gratuities left by customers, but assistant store managers should not.

Two cases before the New York Court of Appeals are among a series of tip-pooling lawsuits that have snagged the Seattle-based coffeehouse giant and other restaurant chains in recent years.

At issue is whether Starbucks “shift supervisors,” hourly workers who perform the same duties as baristas and more, can be considered managers, or an “agent” of management. Under New York labor law, and in several other states, workers in managerial positions are not allowed to share in collective tips.

In a second case, assistant store managers have argued that they should be allowed to participate in tip pools. Starbucks contends that assistant store managers, who are salaried employees, should not share in tips.

Shift supervisors, however, fall into a gray area.

Starbucks has argued that shift supervisors spend most of their time performing the same duties as baristas and therefore should be entitled to share in the tips customers leave for the service provided.

“We believe our customers should have the option to reward our partners for providing great service,” said Starbucks spokesman Zack Hutson. “Shift supervisors spend well over 90 percent of their time providing the same world-class customer service as baristas.”

Baristas challenging the tip pooling policy contend that shift supervisors are paid more and act as “agents,” with some managerial duties, such as opening and closing stores and supervising when baristas take their breaks.

Shannon Liss-Riordan, an attorney representing the baristas in the shift supervisor case, which was originally filed in 2008, said she hoped the Court of Appeals ruling would clarify the law and end the dispute. A ruling is expected before the court’s term ends in August.

Liss-Riordan also represented baristas in a similar class action in Massachusetts that was resolved late last year with a federal court ruling that prohibited shift supervisors from sharing in tips. Starbucks agreed to a $23.5 million settlement, including damages, in that case. The coffeehouse chain also restructured the shift supervisor position in its Massachusetts locations.

Units there now have a “shift manager” position, which the company described as a hybrid of “shift supervisors” and “assistant store manager.” Shift managers are not entitled to share in tips, but their pay and benefits package has been adjusted to make up for the loss of income.

In California, Starbucks shift supervisors are allowed to share in tips.

Baristas there also filed a class-action lawsuit and won a judgment in their favor at the Superior Court level. However, that decision, which would have awarded the baristas $86 million in restitution plus interest, was reversed by a state appeals court in 2009, allowing Starbucks’ tip-sharing policy to remain intact.